Rising operating costs are the biggest problem for micro-enterprises and small companies

Rising operating costs are the biggest problem for micro-enterprises and small companies

The latest UCE RESEARCH study provides an answer to the question of what microenterprises and small businesses are currently most afraid of. 41.3% of respondents mention the generally rising costs of running a business. As Adrian Parol, a financial market expert and one of the co-authors of the study, states, such an indication is understandable. The increase in operating costs has significantly reduced the profitability of businesses, and has often questioned the point of continuing to maintain them. Only part of the increasing burdens are entrepreneurs able to pass on to the recipients of their services or products.

– These types of enterprises usually run their operations locally. They are unable to compensate for rising costs by increasing sales volume or increasing product prices. They are afraid of a decrease in competitiveness on the local market. The costs of running a business have been rising for many years. However, due to the outbreak of the pandemic, the war in Ukraine and high inflation, this increase turned out to be very rapid – comments Łukasz Goszczyński, a long-time restructuring expert and the second co-author of the study.

39.7 percent respondents are afraid of unreliable contractors, and 28.2 percent – increasing ZUS contributions. Łukasz Goszczyński points out that this type of entrepreneurs have limited equity and largely finance their activities with loans. In the event of payment backlogs, they have difficulty repaying their liabilities. This, in turn, has a negative impact on their bank scoring, which in extreme situations may even lead to termination of the loan agreement and bankruptcy of the company. Therefore, the fear of unreliable contractors is not the result of extreme caution, but a real threat that entrepreneurs cannot prevent on their own.

– The rules for paying ZUS contributions have changed, and as a result, the burdens that entrepreneurs have to bear have significantly increased. In the event of non-payment, they are exposed to administrative enforcement and the paralysis of their business. What’s more, these are costs that are difficult to optimize within the scope of the business conducted by the owner of the company – adds Adrian Parol.

In turn, 21.3% of respondents fear losing financial liquidity. According to Łukasz Goszczyński, this should not surprise anyone, because a healthy-minded entrepreneur always has such a scenario in the back of his mind. This approach is justified, because since the middle of last year, the market has seen increased problems with timely payments. This is particularly true for the smallest entities. On the other hand, changes in regulations have slightly fewer indications, which close the top five of the ranking with a result of 20.9%.

– In recent years, we have witnessed rapid changes in regulations, without conducting a reliable analysis of the consequences of the prepared actions. Unfortunately, this approach often resulted in the unprofitability of continuing business. Implementing changes in this way makes it impossible for entrepreneurs to plan business development in the long term, adds Adrian Parol.

The next places on the list are occupied by concerns such as the lack of suitable employees – 20.4%, tax increases – 20.2%, making bad business decisions – 14.3%, and tax office control – 14.1%. Then there are answers related to the actions of competitors – 13.5%, ZUS control – 11.3%, and the lack of orders and customers – 11.3%.

– The mere fact that inspections are carried out by the authorities appointed for this purpose does not directly affect companies. Entrepreneurs know what obligations they have. However, a lack of employees or an increase in taxation may destroy the current business model and lead to the bankruptcy of the company. Hence, this type of answers, and rightly so, were placed in the middle of this ranking – analyzes Łukasz Goszczyński.

According to the survey, microenterprises and small businesses have the least concerns about the country’s political instability – 3.1 percent. The answers regarding contacts with banks or leasing companies are higher – 5.9 percent, as well as the economic slowdown – 9.3 percent.

– These results show that entrepreneurs will assess the current government well for now. In turn, in the area of ​​contacts with banks or leasing companies, there has been a significant improvement in the relations between these entities. Entrepreneurs have the opportunity to use restructuring instruments, adjusting the level of their financial burdens to the expected financial flows. On the other hand, the economic slowdown is a problem, but here entrepreneurs have a wider room to maneuver and the ability to flexibly respond to such risk – sums up Adrian Parol.